Alaska Native Corporations

January 20, 2011by Carl Marrs, Chief Executive Officer

Old Harbor Native Corp.

One of the top priorities of Old Harbor Native Corp. and other Alaska Native corporations (ANCs) continues to be the 8(a) program and our ability to continue to rely on this in the future because it brings money from the Lower 48 states to help fund Alaska Native social programs in Alaska, whether it's for health, education or providing dividends, which all are very helpful to Alaska Natives. Maintaining the program is the No. 1 priority, though Sen. Claire McCaskill is trying to cut the program, but only for Alaska Natives - not for other tribes or benefactors. Why only Alaska Natives? That's the million dollar question. It is unclear how much of a problem she presents because the bureaucracy will continue to function as it was intended to until the law is changed. What will happen with the legislation she has introduced? I don't want to predict anything about Washington, D.C., but I hope that most of those on Capitol Hill understand the importance of the program and all the good it does for Alaskans and all other minority groups such as the Hawaiians.

The Native community is trying to put together program changes that help how the 8(a) program is being administered and to make sure there aren't any abuses within the program. It is coming up with self-policing actions McCaskill may or may not accept and put into legislation. In the past, there have been abuses in the program, but not very many and to throw the baby out with the bathwater is a terrible thing to do when you have so many needy people who are so dependent on it. Historically, too, there have been problems with government contracts with others besides the minority groups, but they didn't throw the whole thing out - yet they want to throw Native corporations under the bus. The argument is that we are costing taxpayers money. It is the opposite because fewer people in Alaska are on welfare programs - more people are being educated because of Native corporations and programs like this. The fact is the government is going to contract this work out either way. We are just a very small piece of the overall contracting, including the Department of Defense programs. The returns Native corporations get on these contracts are very slim, 2 percent to 5 percent on the average, so the argument we are costing taxpayers money is ridiculous, it is a net benefit - American Indians can prosper and bring to their members pride and self-determination.

Although business is going well for the ANCs, because of these issues being raised it is harder and harder to negotiate contracts. Those that participate in the 8(a) program are doing okay, but there are still plenty of village corporations not participating because they are not big enough to be able to do anything.

In terms of the state's economy, I am very worried about where Alaska is headed, especially as it applies to the investments of ANCs statewide. Resource development is pretty much non-existent for several reasons. Alaska does not have a stable tax policy, so companies that invest millions of dollars do not know what their future costs are going to be from a tax standpoint. This can be seen especially with the oil industry, which is withdrawing from continued exploration. The same holds true with the projected gas pipeline. Unless there is long-term stability in our tax structure, companies will be discouraged from investing.

In general, resource development is being held hostage by Alaska's permitting process, which can be seen in mining, timber, and oil and gas - basically all sectors of business. Because it takes so long and requires the developer to jump through so many hoops, the costs are not conducive to encouraging new business in the state. If at the end of the day a company has to spend $100 million to get through the permitting process, chances are they are not going to be able to afford to develop it. The federal permitting process is no better. Here, too, we need to have some sort of stability built into the system. Governor Sean Parnell is working on that, but it's going to take time. ConocoPhillips is going elsewhere, which means the state's largest industry will not be opening new development and providing jobs - a sure sign the economy is going to be in trouble in the future, if we can find a solution to stabilize it. The State tries to send a message to consumers and businesses we're open for business, but once again, CNBC ranked Alaska at or near the bottom state for business due to the high cost of living, high cost of doing business, and weak infrastructure. To Outside companies wanting to do business in Alaska, this is a dismal message on the future of the state.